Wednesday, 22 August 2012

A Temporary Resistance for the DOW?

Dear Friends,

After 6 consecutive weeks of run-up in the Dow Jones index, Dow reached its high 13330 points yesterday. The highest Dow reached in this 4 years rally is 13338 points. Upon touching that 13330 mark, Dow swiftly retraced, bringing down major stocks and index in US.

Like what we mentioned in past articles, there may be a temporary pause to this run-up. Mid term wise, we still maintain our bullish stance. A temporary pause will be marked by

1) Dow decreasing a triple digit in 1 day (one hundred points). Yesterday drop of 60 points is considered mild.


2) Dow decrease 3 days in a row.

If that happens, this will mark a temporary slowdown to the bullishness. For short term players just watch out for this indication. Long term players, it is ok to hold on to your stocks.

In US, Energy Stocks may have reached its peak this week. A suggestion would be to maintain some short positions in Energy sector stocks to hedge against any bullish positions you may have. Energy stocks may find difficulty to go much higher from now.

I did not study if singapore stocks like Keppel Corp has any direct relations to US Energy sector. But I guess there there is some relating factor studying from the chart. From now on, better do not buy anymore Kep Corp stock. Anyway from the chart Kep Corp has reached a Double Top of $11.60. Just be careful!

For these few days, I suggest we stay on the sideline, watch and see how DOW reacts to its 13330 high point. Will it cross over or retrace? Let us leave it to the index to tell us...


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